Decreasing wages within small firms could restrict future investments and the overall development of firms, according to the Federation of Small Businesses (FSB).
"Falling wages is a symptom of declining revenues and profits. For some, it may be pay cuts so bosses can pay staff instead or investing in next year’s new products or services," said Prue Watson, spokesperson for the FSB.
A survey of 3,200 jobs across 400 organisations by Croner has identified that the average 2011 annual pay for small business directors has fallen by £5,000.
"The impact of falling wages for bosses may be that some decide to lay off staff or to row-back on future investments, both of which are detrimental to that business and the economy," Ms Watson said.
Small companies can often be cash hungry, but can be particularly vulnerable as they don't have the same buffers as large businesses to protect them from late payments, Ms Watson added.
This information was provided by TIC (UK) Ltd, 8 China Street, Insurance Intermediaries, Lancaster, LA1 1EX tel: 0845 88 22 806
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